Archive for August, 2011

Recently, Subject: Pokerpublicized that Full Tilt Poker’s $60 million deposit shortfall, the amount of still uncollected funds from player deposits dating back months ago, is in reality closer to a $128 million problem. The shortfall stems from player deposits which were instantly credited by Full Tilt even though the site was unable to debit the money from player bank accounts due to payment processing woes. Essentially, the site loaned $128 million to players on the assumption that they would be able to debit the money from their bank accounts at a later date.

Full Tilt is very unlikely to recover these funds. As Subject: Poker points out, the site make an explicit agreement with the DOJ not to accept U.S. player deposits. The debts range from four months to a year old. Most players are not even aware that they owe money to the site. So even if the hurdle were overcome with the DOJ, the site would face serious troubles trying to debit monies from player bank accounts from deposits made months ago.

Yesterday, Full Tilt released their second statement in as many weeks. Here is the statement in its entirety:

As is obvious from the events that have transpired since April 15th, Full Tilt Poker was not prepared for the far-reaching, US government enforcement effort of Black Friday.

The events of Black Friday came on the heels of prior government enforcement activities and significant theft. Over the two years preceding Black Friday, the US government seized approximately $115M of player funds located in U.S. banks. While we believed that offering peer-to-peer online poker did not violate any federal laws—a belief supported by many solid and well-reasoned legal opinions — the DOJ took a different view. In addition, as was widely reported, a key payment processor stole approximately $42M from Full Tilt Poker. Until April 15th, Full Tilt Poker had always covered these losses so that no player was ever affected. Finally, during late 2010 and early 2011, Full Tilt Poker experienced unprecedented issues with some of its third-party processors that greatly contributed to its financial problems. While the company was on its way to addressing the problems caused by these processors, Full Tilt Poker never anticipated that the DOJ would proceed as it did by seizing our global domain name and shutting down the site worldwide.

Over the last four months, Full Tilt Poker has been actively exploring opportunities with outside investors in order to stabilize the company and pay back our players. At least six of those groups, including hedge funds, operators of other internet businesses and individual investors, have visited Dublin to inspect the operation. We have recently engaged an additional financial advisor through an investment banking group to assist us in our search for an infusion of cash as well as a new management team to restore the site and repay players. While any deal of this nature is necessarily complex given the current regulatory environment, our players should know that Full Tilt Poker is fully committed to paying them back in full and restoring confidence in our operations.

One observation of this statement is that it’s pretty heavy on anti-DOJ rhetoric. Clearly, Full Tilt is hoping to keep players at bay by directing their anger over the site’s financial problems at the DOJ. But one need look no further than PokerStars to see that the DOJ’s actions do not in any way directly equate to player money being compromised.

The more time that passes the more it becomes clear that Full Tilt was an inept operation, a giant house of cards basically. Strangely enough, $128 million of outstanding player money really isn’t outstanding at all; it’s been in player bank accounts all along. While that’s a great beat for the guy who thought he deposited $50 and lost it in the site’s games, it’s a terrible beat for the players who deposited little and won a lot. Those hard fought winnings may ultimately prove to be a mirage.

Since the events of April 15th in which the operators of three major U.S.-facing poker rooms were indicted, much ado has been made about Full Tilt Poker’s poor (or basically non-existent) public relations strategy. The site, which owes an estimated $150 million to their U.S. player base and untold millions more to players from other parts of the world, has made very few public statements on their current financial situation. Players have been left almost entirely in the dark while waiting to see the fate of the money they trusted to the site.

This week, Full Tilt made a rare public statement regarding their talks with investors to sell their assets in order to raise money to repay players. Here is the statement in its entirety:

On August 16, Irish based Pocket Kings Ltd., brand executor for the Full Tilt Poker moniker, concluded the exclusivity period of negotiations with their current potential investor.

While Pocket Kings Ltd. plans to continue discussions with its current investor, the company has now begun negotiations with additional potential investors to conclude the sale/partnership of the Full Tilt Poker brand and its assets.

Full Tilt Poker apologizes for its lack of communication with its customers over the last month and a half, but it has been grappling with unexpected and complex legal and financial issues arising from Black Friday and its aftermath. In addition, the company has had to be circumspect about disclosing the progress of negotiations with potential investors because there is often a requirement of strict confidentiality.

To the extent that it can do so without jeopardizing future opportunities, Full Tilt Poker will strive to have better communication with its customers going forward. Full Tilt Poker’s number one priority remains the same: to secure an infusion of capital to repay all of its worldwide customers.

It’s hard to say for sure, but this seems like bad news for players. Clearly, a deal with their major potential investor has not been reached. One might also speculate that if a deal were imminent, the investors would insist on an extension of the exclusivity agreement. That the exclusivity agreement was allowed to expire, and that they are allegedly talking with other investors, is not exactly a good sign for players hoping to receive the money they have on the site.

We predicted in our latest Weekly Shuffle that no investor in their right mind will fork over the hundreds of millions needed to repay players and take over ownership of the site. As more time passes with no clearly positive news out of the Full Tilt camp, that prediction gains strength.

Today marks the launch of the Epic Poker League (EPL), a members-only series of tournaments modeled somewhat after the PGA; in order to play, you’ve got to have a membership card. To be eligible for membership, you need a considerable amount of accomplishments in the poker world.

The EPL is a “by professionals, for professionals” enterprise. For qualifying players, it’s a tremendous deal. Not only will the action be broadcast on CBS, but the Epic Poker League is adding $400,000 to the prize pool of the tournament that started today (a $20,000 buy-in) and $1,000,000 to the prize pool of an event held in February ($0 buy-in).

A lot of hype and marketing has gone into getting the Annie Duke-founded EPL off the ground. As far as meets the eye, the EPL will be nothing short of a huge success. But I predict it fails.

A big reason for this is that it’s just not that interesting. Before I was anything close to a “serious” poker player, I was a poker fan. I’m still a poker fan. I love refreshing WSOP updates and seeing who will win the next EPT event. But in the case of the EPL, I really don’t give a damn.

Every single person with an EPL membership card is a highly accomplished poker player. Part of the appeal of poker (and one could argue, any competition) is the possibility of a Cinderella story. In the EPL, there are no Cinderellas. There aren’t really any players in the field seemingly incapable of winning the tournament. There are no Moneymakers or Darvin Moons. I honestly could care less who wins the EPL because there’s nothing interesting or surprising about any of them winning. The EPL is a few people trying to cash in on the televised poker bubble (which apparently still hasn’t popped) to the benefit of a few accomplished players who are basically getting paid (via overlay money) to show up and play.

A poker TV production consisting exclusively of accomplished pros and no Cinderella stories needs more than just the competition factor in order to be appealing. It needs loud mouths and big personalities. God help the EPL if the final table of this first event is a bunch of headphone-wearing 20-somethings with no personality. Just thinking about it makes me want to go take a nap.

The competition taking place in the EPL isn’t interesting on it’s own two feet. The idea of making some complicated league that you have to qualify for would be great… if poker were a game of skill. But it’s not. The winner of any single EPL tournament is decided in a very large part by luck. This is true of all poker tournaments, but what makes the WSOP and other tournaments so great is the variety of characters competing for riches. Unlike the EPL, the WSOP is not a mono-culture of spoiled pro poker players.

The EPL will not go belly-up right away. There’s been enough hype and funding to keep it around a little while. But within a couple of years, I think we’ll see it die off. TV ratings will be awful and eventually the EPL will run out of overlay money to add to the prize pool. When that happens, do you think these guys are still going to show up and play a tournament on their own money where 95% of the field is incredibly sharky?

Bleacher Report has included Phil Hellmuth in their list of ’50 Most Punchable Faces in Pro Sports’. The Poker Brat came in at #12 on the list which forces one to ask: there are 11 faces in sports more punchable than that of Phil Hellmuth?!

Apparently, Bleacher Report thinks so. They rank the following sports-figures, and only the following sports-figures, as having a more punchable face than Phil Hellmuth:

A cheating incident in the poker world came to light this weekend. Top Portuguese high-stakes player Jose ‘Girah’ Macedo is the central figure in the incident.

According to a thread on Two Plus Two, Macedo built for himself a network of fellow high-stakes heads-up no-limit players. The group of peers shared strategy advice among one another via Skype. Macedo’s reputation among the group for giving strategy advice was top notch. He earned the trust of several players who allowed him to sweat their sessions and offer strategy advice. When Macedo told these players to sit heads-up on the iPoker network against ‘sauron1989′, who he reassured them was a bad player, they listened.

What these players later figured out was that Macedo was in control of the ‘sauron1989′ account. He scammed his peers out of at least $30,000 by playing them heads-up while observing their hole cards via an established remote relationship. The victims of Macedo’s scam pieced it together after noticing he was always pushing them to play ‘sauron1989′, to whom they predictably always lost to. Additionally, the victims noticed that when Macedo disconnected from Skype, ‘sauron1989′ disconnected from the tables on the iPoker network at the same time. And when Macedo revived his connection to their Skype chat, ‘sauron1989′ would reconnect at the tables.

To his credit, Macedo admits full responsibility and has promised to repay those he scammed as well as an additional compensation of $30,000. In an apology on Two Plus Two, Macedo said, “I’m holding my hands up and taking whatever consequences come. I realise the severity of this, but I also realise that I have to take responsibility for my actions and so I’m paying back everyone involved and in addition paying them compensation of $30,000.”

He continued, “I’m young, I made a mistake and I hope that this doesn’t define me; I hope that how I deal with this and move forward is the thing that does. And people will say I have no excuse and I know and understand that. I agree. I just want to let everyone know, I’m sorry. I apologise to the guys who lost their money, the people who I love and care about and I have disappointed and the guys in the poker world who have supported me for letting them down. I wish I had something to say to you all, to say to my parents and my friends and all of those who thought I could do no wrong.”

Not everyone is accepting Macedo’s apology with open arms. Two Plus Two member ‘CutchaLosses’ has this to say in response to Macedo’s apology: “WOW. 30k is not enough compensation. This is pretty terrible. I’d drop him if I was his sponsor. He only fessed up cuz he got caught he was gonna keep doing it and looking for new prey. What a fraud.”

Macedo is a sponsored pro for Lock Poker, a site on the Merge Gaming Network which the editors of PokerTips encourage our readers to avoid.

Macedo was also a paid consultant on the Brandon Adams-founded start-up site, Expert Insight. Upon learning of the cheating incident, Adams Tweeted, “I’ve been advised of the Jose Macedo thread on twoplustwo and obviously he is off Expert Insight forever.”

Adams continued, “Prob should have never had him on as I was always slightly skeptical. Never read the orig 2p2 thread, but online stars don’t just surface.”

This incident serves as a nice reminder to all online poker players to be cautious about what level of trust you extend to online acquaintances. Many poker players have formed great friendships with other online poker players, but it’s important to bear in mind that the community revolves around people trying to take each other’s money. While a vast majority of players are ethical and honest, there are those who view online poker as a chance to scam and fraud their way to riches. Allowing someone to view your hole cards in real-time, especially in a heads-up game, is a recipe for disaster, even if your history with them allows you to believe they are honest and trustworthy.

This week, we passed along a story from Radar Online about baseball star Alex Rodriguez’s participation in an illegal poker game. The article included quotes from poker pro Dan Bilzerian who confirmed A-Rod’s presence at the game.

Today, Bilzerian took to Twitter to discredit the quotes by saying, “finally someone discredits the bulls*** Star magazine has been pushing.” He included a link to this ESPN article which quotes Bilzerian as saying, “It’s ridiculous. He wasn’t there, I’m telling you. He was playing in the World Series at the time.” Note that Bilzerian means the World Series of baseball, not poker.

Bilzerian also stated on Twitter, “They completely made up s*** [quoted] me saying it. I’m suing them.” And that, “Star magazine even offered my brother money to lie about seeing Arod at a home game, after he told them he had not. They are such scum.”

According to ESPN, Major League Baseball investigators are still working to arrange a date on which to speak with Rodriguez about his alleged involvement in these high stakes games. Rodriguez’s publicist stated with regards to the Star magazine article, “[it] contains numerous factual inaccuracies. Alex looks forward to cooperating with Major League Baseball’s investigation.”

According to the celebrity gossip blog Radar Online, New York Yankees star third-baseman Alex Rodriguez participated in an illegal high stakes poker game where cocaine was reportedly used.

Poker pro Dan Bilzerian, who was in attendance at the game, reported that the game nearly broke out into a fight after record producer Cody Leibel lost a half a million dollars and refused to pay. Bilzerian told the publication that one player in the game “got all coked up.” After the fiasco broke out, A-Rod tried to distance himself from the situation and was caught shaking his head not understanding what happened. Bilzerian claimed that Rodriguez lost “a few thousand dollars” that night and paid up before leaving.

The baseball star is currently under investigation by the MLB for his alleged participation in illegal, underground high-stakes poker games with celebrities.

Rather than investigate Rodriguez, why doesn’t the MLB share information with an editor of PokerTips about where these games are held and how one might get in them? We can go check things out for them and report back.

The Kahnawake Gaming Commission (KGC), noted for their apparently non-existent standards on granting gaming licenses, announced last week that they renewed Full Tilt Poker’s Secondary Client Provider Authorization. Full Tilt had their primary license suspended on June 29th by the Alderney Gambling Control Commission (AGCC) and has been closed for business ever since.

The KGC requires all applicants for a secondary license to have a primary license in another jurisdiction in good standing. While AGCC has suspended Full Tilt’s primary license, it is still considered a valid license. There is no indication that Full Tilt plans to re-open and operate under their secondary license from KGC. The beleaguered site is currently awaiting a hearing with AGCC regarding the status of their license. The hearing will take place sometime between now and September 15th. Last Tuesday, AGCC adjourned their hearing with Full Tilt to grant the site’s request for more time to work out a deal with investors.

Kahnawake has granted UB and Absolute Poker their principal license for years and continues to license them to this day.